Westinghouse nuclear reactors will continue construction in Georgia

In what had become a ceaseless scroll of bad news for Westinghouse Electric Co. in recent months, a decision on Thursday by a group of electric utilities in Georgia to continue building Westinghouse nuclear power plants offered a reprieve and a measure of hope — not just for the bankrupt nuclear firm but for the future of American nuclear technology.

Southern Co., the largest owner of the Vogtle project through its subsidiary Georgia Power, told state regulators that it wants to push ahead with work to build two AP1000 plants near Waynesboro, even though the project is years behind schedule, already billions of dollars over budget and will cost an additional $9.45 billion to complete.

Westinghouse’s president and CEO José E. Gutiérrez said the company was “very pleased” with the decision and underscored the thousands of workers who will get to keep their jobs as a result.

Exactly a month ago, Mr. Gutiérrez was forced to issue a very different statement when two utilities in South Carolina decided to abandon construction of an AP1000 power plant project, V.C. Summer.

About 6,000 workers in South Carolina lost their jobs, including 870 Westinghouse employees who were furloughed.

Cranberry-based Westinghouse, which had been overseeing construction at both sites, had seen its expenses spiral to such an extent that it sought bankruptcy protection in late March to isolate its profitable business lines from the new construction ventures.

Southern’s decision to continue the work — anticipated even more feverishly after the news from V.C. Summer — will be the “shot heard round the nuclear world,” wrote Kit Konolige, a Bloomberg Intelligence analyst.

The Nuclear Energy Institute, a Washington, D.C.-based trade organization, tweeted that it “represents a continuation of American leadership in #nuclear energy.”

Southern echoed the sentiment, explaining why accepting significantly more risk by taking over as the lead on the project was the right step.

“The risks that [Westinghouse] bore have been shifted to Georgians,” Southern wrote in a public filing. “There is no easy choice here; this is an important policy decision that will affect all Georgians for the next 60 to 80 years.”

Then, expanding the radius of stakeholders to the borders of the U.S., Southern said, “It is vitally important that the United States continues to maintain a foothold on nuclear technology as other countries such as China and India continue to develop their nuclear generation construction programs.”

But Southern’s decision isn’t without caveats and several factors have to line up to ensure the project continues, including state regulators approving the proposed budget, Congress extending the expiration of tax credits for producing nuclear power, the federal government continuing and possibly increasing its $8.3 billion loan guarantee to the project, and Toshiba, Westinghouse’s beleaguered Japanese parent company, being able to pay the $3.68 billion guarantee it negotiated with Southern last month.

Toshiba is working to avoid its own bankruptcy by selling off valuable pieces of its company. Its inability to pay the guarantee would be a “fatal event” for the project, Southern said. So would the decision by any of the other Vogtle owners to pull out.

The lone path forward

The decision of utilities in South Carolina to abandon their AP1000 project leaves Southern alone in several critical ways.

First, the Georgia company lost peers with whom it would swap lessons learned and glean insight into Westinghouse’s work on the project. Both projects’ owners have complained in regulatory filings that Westinghouse restricted access to schedules and budget information before the bankruptcy and was slow to disclose it afterwards.

When productivity in the field deteriorated last year, Southern put its own nuclear employees on site to help, which gave the company the added benefit of collecting intelligence on the ground that wasn’t forthcoming otherwise.

The loss of the only other AP1000 construction project in the U.S. — there are four AP1000 plants currently being built in China — and none in the near-term pipeline also increases the chances that the power plants, which are expected to run for 60 to 80 years, will have difficulty finding replacement parts and engineering services in the future.

It was this kind of lapse in the supply chain, which was left to wither with no new nuclear plants being built for three decades, that laid the groundwork for many of the challenges that bogged down the current projects — skilled labor shortages, problems getting fabrication shops up to nuclear standards, quality control issues.

In a public filing on Thursday, Southern said it has hired Bechtel Corp. to take over construction at the site, replacing Fluor Co. which Westinghouse brought in last year to get things on track.

Southern has signed a service agreement with Westinghouse, which continues the nuclear company’s involvement in the project albeit not in the lead role.

The utility also pushed back the expected in service dates for each unit by 29 months, until November 2021 and November 2022.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

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